Tax is a compulsory contribution to state revenue, levied by the government on worker’s income and business profits or added to the cost of some goods, services, and transactions (Oxford Dictionary). The federal income Tax system is now at a center of public debate. To illustrate, The United States is currently practicing progressive tax system, which means a person who earns higher income pays higher tax rate. Whereas another income tax system is call flat tax, which is a tax system with a constant marginal rate in which all taxpayers are taxed at the same rate with no regard of the total income earned. Supporters for flat tax believe that flat tax is simple, fair, and good for the growth of the economy. However, there are some opponent ideas
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Flat tax provides choice, saves time, and restores fairness to the tax code. Proposal of a flat tax say that it would eliminate features of the tax code that could give taxpayers a hard time in filing taxes to the IRS. Under the flat tax system, American taxpayers will benefit by dealing with a simple tax that is easy to understand and report since it taxes all income at a flat rate. In summary, a flat tax would benefit businesses by reducing compliance costs and by stimulating economic activity. Income taxes would increase for many businesses, but eliminating the second layer of taxes on capital income would partially compensate business owners for the increase. Economists’ estimates of lower compliance costs and increases in economic activity suggest these factors would be more important than the tax increase. Overall, the flat tax would generally be positive for …show more content…
The middle-class people will have to pay more through a flat tax. But, what many people do not know is that under several flat tax proposals, “individuals and families would receive personal allowances – a set amount of income that is tax-exempt – that would limit their taxable income. This would allow the lowest-income brackets to be completely or nearly exempt from income taxes”
Flat tax provides choice, saves time, and restores fairness to the tax code. Proposal of a flat tax say that it would eliminate features of the tax code that could give taxpayers a hard time in filing taxes to the IRS. Under the flat tax system, American taxpayers will benefit by dealing with a simple tax that is easy to understand and report since it taxes all income at a flat rate. In summary, a flat tax would benefit businesses by reducing compliance costs and by stimulating economic activity. Income taxes would increase for many businesses, but eliminating the second layer of taxes on capital income would partially compensate business owners for the increase. Economists’ estimates of lower compliance costs and increases in economic activity suggest these factors would be more important than the tax increase. Overall, the flat tax would generally be positive for …show more content…
The middle-class people will have to pay more through a flat tax. But, what many people do not know is that under several flat tax proposals, “individuals and families would receive personal allowances – a set amount of income that is tax-exempt – that would limit their taxable income. This would allow the lowest-income brackets to be completely or nearly exempt from income taxes”